According to Catherine Grant Makokera, director of Tutwa consultancy and an expert on trade and investment in Southern Africa, the monetary situation in Zimbabwe (caused largely by its use of the United States [US] dollar), has had a disastrous impact. ‘Even large companies say they’ve been forced to resort to a form of barter trade,’ she says.
In recent months, speculation has also been rife that Zimbabwe might adopt the rand to help solve the currency crisis. If that happens, it could give South African companies and even government a measure of leverage to impact on the domestic situation. However, Zimbabweans generally mistrust the rand because of its fluctuation to the US dollar, and Mugabe is evidently too proud to accept his neighbour’s currency.
In addition to the currency problems, the ban on imported goods that was slapped on traders in July this year has still not been lifted, even though smaller cross-border traders are managing to find ways around it. The protection of investments and the implementation of the indigenisation act by the government are other major concerns for South Africans, says Grant Makokera.
At the time of Mugabe’s visit to South Africa last year, a bi-national commission was set up to elevate the relationship between the two countries to heads-of-state level. South Africa and China are Zimbabwe’s largest trading partners, with large trade imbalances.
Last year, Zuma said that exports from South Africa to Zimbabwe reached R24.8 billion in 2014, while imports from Zimbabwe fell to R2 billion, down 55% from the R4.4 billion in 2005.
Ironically, if the political crisis can be resolved, business leaders believe that there can be a fairly quick turn-around of the situation. Retailers already present in the country can expand in a relatively short time. Potential investment that has been dormant for 20 years, given the high risk of investing in Zimbabwe, could be released. There are also ample investment opportunities in the mining industry.
Ultimately though, it is still the political situation that is keeping foreign investment out of Zimbabwe – and the economy in intensive care.
At a recent briefing held at the Institute for Security Studies in Pretoria, consultant Piers Pigou warned that there has been a spike in repressive action against any opposition to Mugabe and the ruling Zanu-PF. High-profile arrests like that of #ThisFlag movement leader, pastor Evan Mawarire, and the disappearance of activist Itai Dzamara are only the tip of the iceberg.
Pigou said a starting point could be constructive engagement from the international community about the reform agenda of some members of the government – which includes Finance Minister Patrick Chinamasa and Vice-President Emmerson Mnangagwa. SADC, however, has avoided putting Zimbabwe on the agenda. ‘It is only now, due to the economic fallout and the restrictions on imports, that South Africa is waking up to the situation,’ said Pigou.
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